Financial Conduct Authority (FCA) is a leading financial regulator responsible for 59,000 financial services and markets in the UK. It took over the Financial Services Authority (FSA) in 2013.
FCA earlier introduced the project “Innovate” that offers support to new products. Now, it has come up with a regulatory sandbox that delivers competition in consumers’ interests by allowing testing in a safe environment.
Earlier, FCA was already preparing to embrace the Sandbox. But now it is revealed- “FCA intends to pilot “digital sandbox” to maximize support to fintech and regtech businesses, to deal with challenging times during the pandemic.”
How does the new version of the Digital Sandbox look?
· It allows live testing on real customers in a controlled environment.
· The testing would help firms further understand whether the product works as expected or comply with the law.
· It promotes digital testing on a smaller scale. i.e., a limited number of customers.
· Sandbox framework will ensure that the right protection measures are incorporated into their product and services before they reach to audiences.
The idea is fantastic. How?
If implemented in the right manner, it could benefit innovators, regulators, and consumers. Innovators get a safe space to test their products and limit their regulatory uncertainty.
Regulators have access to increased transparency and insights to financial services and can help innovators design keeping compliance into consideration. Finally, consumers enjoy increased innovation.
At present, FCA aims to help firms get rid of the challenges put forth by the pandemic.
Testing done under Sandbox’s pilot phase will help assess the effectiveness of its features. They have rolled the news that FCA will soon start accepting applications to spread out the pilot program.
This initiative is vital in helping banking and insurance companies as they are preparing to partner with start-up channels to speed up the digitalization of their customer base.
Eventually, FCA will look for industry’s feedback- their opinions on the launch of Sandbox. And this will help promote ideas and better understand the implementation of Sandbox.
